Inside This Issue - Opinion
Linking OTC and Rx purchases
April 23rd, 2012
by Jennifer Johnston
Americans trust pharmacists. Gallup Organization Inc. ranks pharmacists as the third-most-trusted occupation, placing pharmacists ahead of doctors. In fact, 80% of consumers would purchase an over-the-counter product if it were recommended by their pharmacist, according to Harris Interactive.
Clearly, pharmacists can have an impact on the health of the typical American consumer. They also have the opportunity to use their influence to build profits for their store.
Shoppers are spending many of their drug store dollars on such front-end merchandise as health, beauty and wellness products, including OTCs. Retailers should consider creating and implementing a plan that enhances shoppers’ OTC purchases to complement their prescription treatments. Not only can this improve patient care, it can also increase a store’s revenue while decreasing dependence on prescription reimbursements.
Why is the opportunity ripe for linking OTC and prescription sales? For one thing, shoppers are looking to consolidate their shopping trips. They don’t want to waste time and gas going to multiple retailers. A 2002 study by the National Association of Chain Drug Stores showed that 78% of drug store shoppers choose retail outlets based on convenience, which outranks price, service, selection and promotions.
Prescription drop-off and pickup are major drivers for shoppers entering your store, motivating from 25% to 50% of drug store visits, according to the NACDS study. But those shoppers leave with only their prescription in hand 42% to 62% of the time. This gives your staff the opportunity to direct them toward your front-end offerings.
Patients may be open to a pharmacist’s suggestion, but first pharmacists must engage patients. A nationwide survey found that among all OTC-related conversations between patients and pharmacists, the pharmacist initiated the discussion only 13% of the time. Initiation is the first step to identifying an add-on sales opportunity.
Growing sales is perhaps the most important reason to invest in relationship building. The NACDS study indicated that the average drug store nonpharmacy market basket purchase totals $19.38. If a pharmacist suggests an additional $2 item, the market basket total would increase by 10%.
Meanwhile, a 2007 Boehringer Ingelheim Pharmaceuticals/Wilson Rx survey showed that pharmacy customers spent an average of $87 on prescription medications per month. A suggestion by the pharmacist and subsequent purchase of just one $5 to $10 OTC product linked to a shopper’s prescription within that month would therefore increase that market basket by a range of about 6% to 11%.
Consider that if a pharmacist encountered 75 O-T-C counseling opportunities per week, which each lasted about five minutes, and those 75 patients each added an OTC item worth only $5 to their prescription purchase, the pharmacy would earn $375 per week in additional OTC sales for an investment of about six hours of time.
Training pharmacy staff is the most important way to put a plan in motion. Although dispensing prescriptions and counseling patients should be their No. 1 focus, drug stores must also maintain a profitable front end in order to be competitive with other retailers.
Give staff specific recommendations for how to strike up conversations about OTCs by asking pointed questions.
Retailers may also wish to stock the pharmacy area with educational leaflets pertinent to common medication side effects and their OTC remedies.
Don’t underestimate the power of suggestive placement. The pharmacy area can be used to display high-impulse items that are related to common symptoms or prescriptions. These items may be changed seasonally.
Point-of-sale software can also be synced with programs that will print off OTC product coupons based on the prescription type. Similarly, programs exist that will track the number of a shopper’s prescription purchases. After a designated number of purchases, a gift card can be presented to the shopper for nonprescription items in the store, which encourages shoppers to familiarize themselves with your OTC selection.
Finally, stores can show that they care about the medical conditions of their shoppers by observing national health observances such as American Diabetes Month. Promote in-store specials and sales of OTC products related to the condition, provide special literature and even host a product demonstration event.
Jennifer Johnston is an industry writer and researcher with Hamacher Resource Group.